Retailers under pressure ahead of Black Friday

Patriot Ledger staff

Wednesday

Nov 26, 2008 at 12:01 AMNov 26, 2008 at 6:51 AM

The Friday after Thanksgiving is always an important day in the retail world. But this year it takes on added significance and retailers are feeling the heat, especially given the relative late “Black Friday” and persistent doubts about the economy’s strength this holiday season.

The Friday after Thanksgiving is always an important day in the retail industry. But this year it takes on added significance, and retailers are feeling the heat. The sluggish economy has everyone on edge. And what makes this long post-holiday weekend especially significant is its timing, because retailers lose a weekend between Thanksgiving and Christmas.

“You’re compressing sales into a shorter period,” said Jon Hurst, president of the Retailers Association of Massachusetts.

Despite all the attention it gets, the Friday after Thanksgiving, known as “Black Friday,” isn’t typically the year’s busiest shopping day, Hurst noted. It usually ranks fifth or sixth, behind the weekend days preceding Christmas.

A lot more is on the line this year, and a relatively strong or weak sales day could speak volumes as to how the holiday season will turn out. With only four weekends between Thanksgiving and Christmas, merchants will be under more pressure this weekend to ring up as many items as possible.

The shortened Thanksgiving-Christmas stretch exacerbates an already tough situation for the retail industry, with the weak economy inducing many consumers to scale back their spending plans. The state’s retailers anticipate that sales at stores open at least a year will drop by an average of 1 percent from the November-December time period last year.

“It’s not going to be an easy holiday season,” Hurst said. “The retailers are just trying to get through it and trying to tread water.”

WHY ‘BLACK FRIDAY’?

“Black Friday” gets its name because, given the high volume of sales, it was often the day when retailers went from being unprofitable – in the red – to becoming profitable – in the black – for the year.

Hurst said many retailers in the state saw disappointing sales in September and October, but the industry also has ticked up a bit since early November.

“It started getting a little more positive once we got past the election,” Hurst said. “Shoppers are back out now, and they are spending. ... We’ll see if that momentum continues through Black Friday and this weekend.”

That shift leaves him hopeful that some local retail companies will report sales at least as strong as what they saw in last year’s holiday season. However, Hurst anticipates that retailers’ profits may suffer because many stores are offering deeper discounts this year, hoping to attract price-conscious shoppers.

Black Friday is also important to retailers because the sales that day provide an important barometer of consumer attitudes.

“It gives you an idea of what’s going to be hot, what promotions are moving the consumer and what you need to do to compete with the guy across the street,” Hurst said.

‘BLACK FRIDAY’ BREAKDOWN

It goes by a sinister name, “Black Friday,” but for retailers it often is a great source of success.

Still, store owners and operators are on edge this holiday season, hoping to survive – if not thrive – in today’s tough economy.

So, just how big is “Black Friday,” which occurs the day after Thanksgiving every year? While it’s often not the biggest shopping day of the year – Americans love to procrastinate, so the Saturday before Christmas attracts throngs to garner that honor – here are some numbers to help you put the retail holiday in perspective.

14.5 million: Google hits in a search for “Black Friday”
$347: average amount spent by shoppers during the three-day post-Thanksgiving weekend in 2007
2.2: percent increase in holiday season spending, predicted by the National Retail Federation
$470.4 billion: National Retail Federation’s holiday shopping season sales prediction for 2008
14: percentage of “Black Friday” shoppers who showed up at stores before 4 a.m. in 2007

Sources: National Retail Federation, International Council of Shopping Centers

IT'S IN THE CARDS

Credit, and to a lesser extent, gift cards, are as much part of the holidays as Santa Claus, malls and mistletoe. A sampling of key figures on the credit and gift card fronts:

74 percent of holiday shoppers use a credit card
Over 1 billion Visa cards issued worldwide, including more than 450 million domestically (with many people having more than one)
292 million credit cards are actually being used in the U.S., according to a 2006 government study
46 percent, total market share for Visa – i.e. the percentage of Americans with a Visa card – 10 percent more than MasterCard
$106.03 billion: volume of debit card usage on Bank of America accounts, nearly double its nearest competitor, Wells Fargo
1958: year the first widely accepted plastic credit card, from American Express, debuted. The BankAmerica card, renamed Visa in 1977, emerged a year later.
$25 billion in gift card sales is predicted for the 2008 shopping season
21 percent of ‘Black Friday’ shoppers in 2007 purchased gift cards

Sources: Creditcards.com, National Retail Federation, International Council of Shopping Centers

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